Chapter 13: Retailing Retailing retailing involves the sale ...
Equitisation and M&A of State-Owned Enterprises in...
Transcript of Equitisation and M&A of State-Owned Enterprises in...
www.duanemorris.comwww.duanemorris.com
©2010 Duane Morris LLP. All Rights Reserved. Duane Morris is a registered service mark of Duane Morris LLP. Duane Morris – Firm and Affiliate Offices | New York | London | Singapore | Los Angeles | Chicago | Houston | Hanoi | Philadelphia | San Diego | San Francisco | Baltimore | Boston | Washington, D.C.
Las Vegas | Atlanta | Miami | Pittsburgh | Newark | Boca Raton | Wilmington | Cherry Hill | Princeton | Lake Tahoe | Ho Chi Minh City | Duane Morris LLP – A Delaware limited liability partnership
Duane Morris & Selvam LLP Singapore 6 July 2017
Equitisation and M&A of State-Owned Enterprises in Vietnam Recent Trends and Corporate Governance
Manfred OttoRegistered Foreign LawyerDuane Morris Vietnam LLC
© 2017 Duane Morris LLP. All Rights Reserved. Duane Morris is a registered service mark of Duane Morris LLP. Duane Morris – Firm and Affiliate Offices:New York | London | Singapore | Los Angeles | Chicago | Houston | Hanoi | Philadelphia | San Diego | San Francisco | Baltimore | Boston | Silicon Valley | Washington, D.C.Las Vegas | Atlanta | Miami | Pittsburgh | Newark | Oman | Boca Raton | Wilmington | Cherry Hill | Myanmar | Lake Tahoe | Ho Chi Minh City | Shanghai | Yangon | Taipei
Duane Morris LLP – A Delaware limited liability partnership
www.duanemorris.com
Duane Morris – one of the largest law firms worldwide
2
• 750 attorneys in 28 offices• Regularly top-ranked by Chambers
& Partners, Legal 500, ILFR1000
• First-of-its-kind deals requiring creative solutions in a complex legal landscape
www.duanemorris.com
Today’s Topic – Vietnam’s State-owned Enterprises
1. Background and Recent Trends 2. Corporate Governance
3
www.duanemorris.com
Objectives of Equitisation
4
HarmonyEconomicEfficiency Transparency
Article 1, Decree 59/2011/ND-CP
www.duanemorris.com
Number of 100% state-owned enterprises
5
12,000
1370
2,000
4,000
6,000
8,000
10,000
12,000
1990 1995 2000 2005 2008 2010 2012 2016 2020
Sources: Created based on the information from CIEM and OECD
www.duanemorris.com
SOE – Different Definitions• Definition under Vietnam’s Enterprise Law:
Enterprise of which 100% of the charter capital is held by the State
• Definition for convenience and FTAs:Enterprise of which the State owns a majority stake and where the State can control strategic resolutions
6
www.duanemorris.com
SOE Equitisation Plan for 2016-2020State Shareholding Types of Businesses
100%Mapping services for national defence and security, Manufacture and sale of industrial explosives, Lottery, Air traffic services, Maritime safety, Public postal services, Banking, Electricity distribution, etc.
65%+ Financial and Banking services, Airport Management, Large-scale mineral mining, Gas exploration, etc.
50 – 65%Air transport services, Cigarette manufacture, Telecommunications services, Electricity retailing, Growth and processing of rubber and coffee, Enterprises which are able to satisfy the essential demand for material life of ethnic groups in the mountainous, isolated and remote areas, etc.
50% or less!Construction, Tourism, Information and Communications, Environment, lighting and water supply and drainage, Oil, Electricity generation
9 Decision 58/2016/QD-TTg
www.duanemorris.com
Wholly State-owned (103 enterprises by 2020)
Types of Businesses Lists of enterprises Air Traffic Services ・Vietnam Air Traffic Management Corp. Management of railroad structure ・Vietnam RailwaysLottery ・Vietnam Lottery CompanyPublic postal services ・Vietnam Post Corp.Banking ・Ocean Bank
・Vietnam Securities Depository・The Vietnam Development Bank
Electricity distribution ・Vietnam Electricity (EVN) - Parent Company“Others” ・Vietnam National Oil and Gas
Group (Petro Vietnam) - Parent Company
10 Annex IIa /IIb of Decision 58
www.duanemorris.com
65% or more State-owned (4 enterprises by 2020)
Types of businesses Lists of enterprises Financial and Banking services ・Vietnam Bank of Agriculture and Rural
Development (Agribank)
Large-scale mineral mining ・Vietnam National Coal – Mineral Industries Holding Co., Ltd. (Vinacomin)
・Thua Thien Hue Minerals Co., LtdGas exploration and extraction ・Petro Vietnam Exploration Production
Corporation
11 Annex IIa /IIb of Decision 58
www.duanemorris.com
50 – 65% State-owned (27 enterprises by 2020)
Types of Businesses Lists of enterprises Telecommunications services
・Vietnam Mobile Telecom Services (Mobifone)・Vietnam Posts and Telecommunications
Group (VNPT)
Electricity retailing ・5 regional subsidiaries of EVN Cigarette manufacture ・Vietnam Tabaco Holding Company
12 Annex IIa IIb of Decision 58
www.duanemorris.com
50% or less State-owned (106 enterprises by 2020)
Types of Businesses Lists of enterprises Construction ・Song Da CorporationInformation and Communications
・Vietnam Cable Television (VTV cab)・VTV Broadcom Co., Ltd
Environment, lighting and water supply and drainage
・Hanoi Water Corporation (Hawaco)・Saigon Water Corporation (Sawaco)
other 51 subsidiaries Tourism ・Saigontourist Holding CompanyOil ・Petro Vietnam Oil Corporation Electricity production ・Petro Vietnam Power Corporation
・EVN GENCO1, 2, 3
13 Annex IIa /IIb of Decision 58
www.duanemorris.com
Vietnam Gov welcomes Strategic Investors
Requirements for “strategic investors” under the law1. Adequate financial capacity
2. Long-term commitment → Obligation to hold purchased shares for 5 years
3. Post-equitisation obligations:→ Transferring new technologies → Managing the enterprise
→ Training human resources → Supplying raw materials
→ Raising financial capability → Sales development
15 Art. 6.3 of Decree 59/2011/ND-CP
www.duanemorris.com
Process from the perspective of strategic investors
16
DD企業評価 株式化の実施 完了/株式化後
・Due Diligence・Documentation・Approval・Enterprise Valuation
・IPO OR Direct Agreement
・Sign Contract ・Investment and
Enterprise Registration
・Post-Merger Integration (PMI)
・Corporate Governance ・Listing
Preparation Implementation Post-Closing
www.duanemorris.com
5 Top SOE M&A Due Diligence Issues
1. Foreign investment restrictions
2. Ownership issues
3. Debt
4. Dual accounting book / Tax compliance
5. Transfer pricing
17
Transparency? Enterprise
Value?
www.duanemorris.com
Business Structure
18
Legal Representative
Board of Directors
Inspection Committee
General Meeting of Shareholders
www.duanemorris.com
General Meeting of Shareholders Voting Thresholds 65%
SpecialResolutions
・Restructuring or dissolution of the company ・Amendment and supplementation of the company's charter・Investment or sale of assets with a value of 35% or more of
the total assets held by the company ・Types of shares and total amount of shares of each type35%
Veto Right
51%Ordinary
Resolutions
・Ratify the company’s development orientation・Ratify annual financial statements・Elect Chair and members of the Board and Inspection Committee
19
* The above general thresholds may different depending on the company’s charter.
www.duanemorris.com20
RESOLUTION
65%Old law 75%
51%Old law 65%
QUORUM
JSC – General Meeting of Shareholders
•Ordinary Resolutions
1st 51% (Old law: 65%)
2nd 33% (Old law: 51%)
3rd No limit
RESOLUTION
QUORUM
MLLC – Members’ Council
75%
65%
• Special Resolutions
•Ordinary Resolutions
• Special Resolutions
1st 65% (Old law: 75%)
2nd 50%3rd No limit
RESOLUTIONBY WRITTEN OPINION
RESOLUTIONBY WRITTEN OPINION
51% 65%Old law 75% Old law 75%
www.duanemorris.com
Board of Management• Board Members
– Number: 3 – 11– Term: Max. 5 years
• Quorum– First meeting: at least 3/4th of the Members– Second meeting: more than 1/2 of the members
• Resolutions– General Rule: Majority of attending Members– Can be prescribed by the company’s charter (→ Reserved Matters!)
21 Picture: vietnamtourism.gov.vn
www.duanemorris.com
Management control by minority shareholder? • Required equity interest for Veto Right
(Can be adjusted in charter)
• Reserved Matters?
• Voting Preference Shares?
• Restricting provision of technology, materials,
and cash?
• Other measures?
23
JSC – at least 35%
LLC – at least 25%
www.duanemorris.com
Contacts
Manfred K. OttoRegistered Foreign Lawyer Phone: +84 28 3824 0236Email: [email protected]
Duane Morris Vietnam LLCHo CHI MINH CITYSuite 1503/04, Saigon Tower29 Le Duan, District 1Ho Chi Minh CityVietnam
HANOIPacific Place, Unit V1307/130883B Ly Thuong Kiet StreetHoan Kiem District, HanoiVietnam